Anyone local to the Avoyelles area hearing anything about the Eagles Ranch Well? It appears that they recently finished drilling well and should be moving frac crews on location soon.

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Skip:

There are a number of examples of AC gas wells completed in western central LA.  A number of Burr Ferry wells were originally completed and continue to produce as gas wells.  Also, Masters Creek (and all nearby adjacent namesake fields) produced a significant gas component (although all or nearly all were classified as oil wells).

As far as NGL regs and tracking - in LA parlance, products or either oil (liquid) or gas, dependent upon state at defined temperature and pressure.  That is what is tracked and reported.  Water / BSW counts for testing but is not specifically measured in the SONRIS system.  NGLs inhabit the ethereal "in-between" - "Vapor" is gas, "Condensate" is liquid (oil).  The issue with NGLs becomes that of capture, separation and treatment - NGLs are not required to be split-streamed and sold.

In many cases, "rich gas" is simply sold at the marketing point for BTU content, unless either rejected (off-spec) or otherwise separated from the stream (via cryo-unit, separation and compression either on-site, at the field plant or otherwise transported as raw feed to a larger central facility).  In some cases, the producer (lessee) receives the benefit of NGL capture (which is sometimes passed to the lessor), in others, the purchaser alone receives it post-processing (no benefit to the lessor).

The no benefit to the lessor part is where my concerns come in.  Thanks for the clarification, Dion.

Skip:

Also consider that NGL separation is not always profitable in the upstream model.  Concentrations needed would have to exceed the threshold of profitability in order to install the necessary equipment for producers to realize capture and revenue.  Specifically to your areas of interest, this profitability has been low to marginal, except as large gathering and transmission facilities.

This presentation (link) is dated (2012), but illustrates the problems of free-market effects on these product streams.  Most pertinent material begins Slide 20 and after...

In a forced (regulatory) environment, pressures can be put into place to incentivize NG and NGL capture (e.g., new North Dakota regs designed to reduce flaring and increase product takeaway).  But in NW LA (and particularly dry gas plays, ie. Haynesville) a "forced NGL capture" model and/or royalty burden on NGL components could have a chilling effect on future development.

I live across from the "Eagles Nest" and there is a very healthy flare of gas being burned off last night. For what it's worth.

Dion

I think you really have a handle on this important issue. Could you please break this response down a little further for those of us without an O &G background?

Dion, I understand the concept of ethane rejection and that sufficient volume is required for profitable NGL extraction.  Although the Haynesville Shale is not a good NGL source, much of the current CV and LCV production in north and northwest LA is wet gas with considerable profit potential for NGL.  Future NGL demand looks strong.

Skip:

Although I appreciate the amount liquids component present in the wet gas side of the CV and LCV, these developments cannot be evaluated in a vacuum.  Other plays with sufficient (and in some cases markedly better) takeaway capacity with even higher liquids component exist and produce heavily laden gas streams which are rapidly soaked into the market.  NW and north central LA must compete with these alternative streams in the common marketplace.  It’s more than just ethane.  Propane markets are increasingly saturated which drives down demand.  The midstream and downstream facilities which have served as alternate capture and production points for these conpounds continue to produce into the market stream.  While developing markets abroad can soak up some of this supply (particular C3 and C4) there is a finite market for these products.

Particular to ethane, suitable transport infrastructure must be ramped up to transport and accept this stream from more, and more far removed, production points if one is to have any hope of fostering demand sufficient to warrant ethane capture above that which transmission companies can accept.  Even then, one can easily visualize a scenario where the bottleneck is merely removed further downstream to petrochemical facilities that can utilize this stream (e.g. Ethylene, PE, EO) which has significantly ramped up production in recent years but only to burrow into (again) a finite market for refined intermediates and finished product.

All that said - W TX and S TX continue to dump shiploads of NGLs as byproducts of their oil production.  They in turn supply much of the TX Gulf Coast refinieries and overspill into Lake Charles and beyond.  North LA can displace some of this market share, but not to the point of exhaustion of its available NGL stream prior to being priced out.

Craig:

The issue that Skip raises is a good one, in that producers do have options in being able to separate and/or alternatively market these products.  For most of the history of oil and gas development, oil was king (being easily transported, refined and used) and gas was a red-headed stepchild.  Once NG pipeline infrastructure and distribution advanced to a certain point where NG could be efficiently distributed to large portions of the population, it ascended to a point of prominence with which we have become familiar today.  NGLs were niche compounds with limited application and market, being neither oil nor gas but possessing properties of both.  Petrochemical processes and materials research has largely grown this market to the point that pre-shale revolution the margins on these products was sufficiently thin so as to make separation and selling this stream could become immensely profitable at times.  This is less the case today as shale production can produce a much broader population of hydrocarbons than conventional production generally did.  And although a producer has more access to modular units and facilities that can create such an alternate product stream, one still has to expend resources to separate the product and reach a certain purity, and then have the ability to transport it to a willing buyer.  For that, profitability and access is key.  Texas fields on the whole are currently better equipped at both, and their product streams in hot plays create more volumes of these compounds than Louisiana fields.

One could attempt to “create” a market by regulation (purposed either to separate, meter and sell more NGL) or by contract (provisions which either incentivize producers to produce these streams or penalize them for not doing so).  But this alone will not change current infrastructure constraints or market forces.

See Torrent oil apply for drilling permit for North Bayou Jack Field anybody knows about them

The company is registered as an operator with the state but they have no wells or history.

Org ID Name
T2660 TORRENT OIL LLC

Address Information

Oper Type Addr1 Addr2 Add Type City, State Zip ATTN Name Contact Name Phone Num Phone Type
01 2 GREENWAY PLAZA, SUITE 250 01 HOUSTON, TX 77046- HENRI DELAUNAY (713)955-3800 OFFICE
01 2 GREENWAY PLAZA, SUITE 250 03 HOUSTON, TX 77046- HENRI DELAUNAY (713)955-3800 OFFICE
01 2 GREENWAY PLAZA, SUITE 250 05 HOUSTON, TX 77046- HENRI DELAUNAY (713)955-3800 OFFICE
01 2 GREENWAY PLAZA, SUITE 250 06 HOUSTON, TX 77046- HENRI DELAUNAY (713)955-3800 OFFICE
01 2 GREENWAY PLAZA, SUITE 250 11 HOUSTON, TX 77046- HENRI DELAUNAY (713)824-8153 OFFICE

Organization Officers

Officer Name Title
HENRI DELAUNAY EXECUTIVE VICE PRESIDENT
GREG WACHEL PRESIDENT / CEO

Thanks Skip for the information

Torrent Oil is made up of previous Hilcorp employees. 

Link to Torrent North Bayou Jack Unit Application.

torrent%20north%20bayou%20jack%20unit%20app.pdf

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